Here's 5 things you should know before you flip a property:
1. Money is made at the buy, not the sale of your flip.
When flipping a house, your profit is made when you purchase, not when you sell the house. Often times people buy an investment property with the intentions of making a huge profit only to find out that they could not make any money after all the renovations were completed because the purchase price was too high. If they look back, they will see that the mistake was made with the purchase price by not factoring in all the associated costs, not the sold price.
2. Get an inspection on the home.
If possible, get a complete inspection done on your property. By spending a few hundred dollars on this expense you can save thousands of dollars and many headaches. An inspection will uncover problems that you cannot see such as foundation, Wood Rot, Pest issues, etc. When you pay for a full inspection, you can rest assured that you know everything that is wrong with the property before it’s too late. In the contract for the house you need to make sure that you have 7 days to have an inspection performed. If the inspection finds problems that are going to cost more money than you are willing to spend you can get out of the contract without penalties.
3. Don't do the work yourself:
Get a contractor or several sub-contractors and have the work done quickly. You need to have you house flipped ASAP, so that you can get it on the market and get it sold. Time is money and it’s critical that the work be done quickly and efficiently.
4. Place the property for sale 2 to 4 percent below market value.
If you are wanting to flip real estate and make money the object is to buy and sell the property as quickly as possible, so that you can move on to the next house. If you purchase a house and list it at top dollar to make an extra couple of thousand dollars on your flip, and end up holding it for 6 months, you are losing money. Get the house on the market at a price that is going to blow the competition away, and you will sell it no matter what the market conditions.
5. Use a Licensed Real Estate Agent.
Do not try to sell your house on your own. Harness the power of a Licensed, Professional Real Estate Agent and the power of the MLS system. When you do a FSBO you are depending on people driving by your house and seeing your sign, however, with a real estate agent you have someone actively marketing your house to get it sold. Once again this will free up more time for you to look for more great deals
Many of these steps may be well known to the experienced real estate investor and home flipper; however, they are so important, that they deserve repeating. If you aren’t doing them already, you may want to consider making them part of your operating procedures. If you continue to educate yourself and learn, you will make money. Please do your homework before you purchase a house, and make sure that you can pull a profit on your deal. Then, make it happen!